HOUSE BILL 23-1174
BY REPRESENTATIVE(S) Amabile and Brown, Boesenecker, Dickson,
Herod, Joseph, Kipp, Lieder, Lindsay, Lindstedt, Mabrey, Martinez,
McCormick, Michaelson Jenet, Ricks, Sharbini, Story, Titone, Velasco,
Weissman, Willford, McCluskie, Bacon, Bird, English, Epps, Froelich,
Garcia, Hamrick, Mauro, Ortiz, Parenti, Valdez;
also SENATOR(S) Baisley and Roberts, Cutter, Danielson, Gardner,
Hansen, Jaquez Lewis, Kirkmeyer, Kolker, Liston, Marchman, Pelton B.,
Priola, Smallwood, Sullivan, Will, Fenberg.
C
ONCERNING HOMEOWNER 'S INSURANCE, AND, IN CONNECTION THEREWITH,
REQUIRING CERTAIN REPORTS RELATED TO THE COST OF
RECONSTRUCTING A HOME
, INCREASING THE NOTICE REQUIREMENT
BEFORE AN INSURER CAN CANCEL OR REFUSE TO RENEW A
HOMEOWNER
'S INSURANCE POLICY , CREATING GUARANTEED
REPLACEMENT COST COVERAGE IN HOMEOWNER
'S INSURANCE, AND
MAKING AN APPROPRIATION
.
Be it enacted by the General Assembly of the State of Colorado:
SECTION 1. In Colorado Revised Statutes, add 10-1-144 as
follows:
NOTE: This bill has been prepared for the signatures of the appropriate legislative
officers and the Governor. To determine whether the Governor has signed the bill
or taken other action on it, please consult the legislative status sheet, the legislative
history, or the Session Laws.
________
Capital letters or bold & italic numbers indicate new material added to existing law; dashes
through words or numbers indicate deletions from existing law and such material is not part of
the act. 10-1-144. Cost to reconstruct a home - annual report -
homeowner's insurance affordability study - rules. (1) (a) T
HE
COMMISSIONER SHALL CONTRACT WITH AN INDEPENDENT THIRD PARTY TO
PREPARE AN ANNUAL RESIDENTIAL RECONSTRUCTION CONSUMER
INFORMATION REPORT ON THE COST OF RECONSTRUCTING HOMES IN
COLORADO, TAKING INTO ACCOUNT THE REGION OF THE STATE , THE HOME
TYPES BY DESIGN STRUCTURE
, DIFFERENT HOME CUSTOMIZATION TYPES, AND
THE FACTORS INCLUDED IN SECTION
10-4-110.8 (8). THE COMMISSIONER
SHALL COMPLETE THE REPORT BY
APRIL 1, 2025, AND BY APRIL 1 OF EACH
YEAR THEREAFTER BASED ON DATA FROM THE PRECEDING CALENDAR YEAR
.
(b) T
HE DIVISION SHALL POST THE ANNUAL REPORT PREPARED
PURSUANT TO THIS SUBSECTION
(1) ON THE DIVISION'S WEBSITE BY APRIL 15
OF EACH YEAR.
(2) A
FTER A STAKEHOLDER PROCESS , THE COMMISSIONER MAY
CONTRACT WITH AN INDEPENDENT THIRD PARTY TO EVALUATE POLICIES TO
ADDRESS THE AFFORDABILITY OF HOMEOWNER
'S INSURANCE.
(3) T
HE COMMISSIONER MAY PROMULGATE RULES TO IMPLEMENT
THIS SECTION
.
SECTION 2. In Colorado Revised Statutes, 10-4-110.7, amend (3)
as follows:
10-4-110.7. Cancellation or nonrenewal - homeowner's
insurance policies. (3) No
AN insurer shall NOT cancel or refuse to renew
a policy of homeowner's insurance unless such insurer mails, by first-class
mail to the named insured, at the last address shown in the insurer's records,
at least thirty
SIXTY days in advance, a notice of its intended action pursuant
to section 10-4-110 that specifically states the reasons for proposing to take
such action; pursuant to section 10-4-110; except that, where cancellation
is for nonpayment of premium,
THE INSURER SHALL PROVIDE at least ten
days' notice of cancellation accompanied by the reasons therefor shall begiven FOR TAKING SUCH ACTION.
SECTION 3. In Colorado Revised Statutes, 10-4-110.8 amend
(6)(a), (8), and (15); and add (3)(d.7) and (9.5) as follows:
10-4-110.8. Homeowner's insurance - prohibited and required
PAGE 2-HOUSE BILL 23-1174 practices - estimates of replacement value - additional living expense
coverage - copies of policies - personal property contents coverage -
inventory of personal property - requirements concerning total loss
scenarios resulting from wildlife disasters - definitions - rules. (3) As
used in this section, unless the context otherwise requires:
(d.7) "I
NFLATION PROTECTION COVERAGE " MEANS COVERAGE THAT
PROVIDES AUTOMATIC ADJUSTMENTS OF THE COVERAGE AMOUNT ON THE
DWELLING OR STRUCTURE BEING INSURED TO PROTECT AGAINST THE IMPACT
OF INFLATION
.
(6) (a) (I) Before issuance or renewal of a replacement-cost
homeowner's insurance policy whose dwelling limit is equal to or greater
than the estimated replacement cost of the residence, the insurer shall make
available to an applicant the opportunity to obtain extended
replacement-cost coverage and law and ordinance coverage. At a minimum,
the insurer shall make available
OFFER law and ordinance coverage in an
amount of insurance equal to ten TWENTY percent of the limit of the
insurance for the dwelling and extended replacement-cost coverage in an
amount of insurance that is at least twenty
FIFTY percent of the limit of the
insurance for the dwelling. Information provided must be accompanied by
an explanation of the purpose, terms, and cost of these coverages. This
paragraph (a)
SUBSECTION (6)(a) does not apply to any homeowner's
insurance policy that already includes
GUARANTEED REPLACEMENT COST
COVERAGE
, INFLATION PROTECTION COVERAGE, extended replacement-cost
coverage, and
OR law and ordinance coverage in amounts greater than or
equal to the amounts specified in this paragraph (a) SUBSECTION (6)(a).
(II) N
O LATER THAN JANUARY 1, 2025, AND AS PRESCRIBED BY THE
COMMISSIONER BY RULE
, THE INSURER SHALL:
(A) L
IST ON THE DECLARATION PAGE OF THE POLICY , IN BOLD AND
IN TWELVE
-POINT TYPE, WHETHER A CONSUMER PURCHASED OR REJECTED
THE ADDITIONAL COVERAGES LISTED IN THIS SUBSECTION
(6)(a); AND
(B) PROVIDE THE PREMIUM COST ASSOCIATED WITH THE REJECTED
ADDITIONAL COVERAGES LISTED IN THIS SUBSECTION
(6)(a) IN A SEPARATE
NOTICE WITH THE APPLICATION OR RENEWAL OF THE POLICY
.
(8) The insurer must consider subject to the insurer's underwriting
PAGE 3-HOUSE BILL 23-1174 requirements, an estimate from a licensed contractor or licensed architect
submitted by the policyholder as the basis for establishing the replacement
cost of a dwelling. THE FOLLOWING FACTORS AS A BASIS FOR ESTABLISHING
THE RECONSTRUCTION COST OF A DWELLING
:
(a) T
HE RECONSTRUCTION COST ESTIMATED FROM THE ANNUAL
REPORT PREPARED PURSUANT TO SECTION
10-1-144;
(b) T
HE RECONSTRUCTION COST ESTIMATING SOFTWARE USED AND
THE SOFTWARE ESTIMATE
;
(c) S
PECIFIC RECONSTRUCTION EXPENSES , INCLUDING:
(I) L
ABOR, BUILDING MATERIALS, AND SUPPLIES;
(II) A
CONTRACTOR'S OVERHEAD AND PROFIT;
(III) D
EMOLITION AND DEBRIS REMOVAL ;
(IV) C
OST OF PERMITS AND ARCHITECT'S PLANS AND FEES; AND
(V) FEATURES OF THE STRUCTURE, INCLUDING:
(A) T
HE FOUNDATION TYPE;
(B) T
HE TYPE OF FRAME;
(C) R
OOFING MATERIALS AND TYPE OF ROOF ;
(D) S
IDING MATERIALS AND TYPE OF SIDING;
(E) S
QUARE FOOTAGE;
(F) N
UMBER OF STORIES;
(G) A
NY WALL HEIGHTS THAT ARE NOT STANDARD ;
(H) I
NTERIOR FEATURES AND FINISHES, SUCH AS THE HEATING AND
AIR CONDITIONING SYSTEM
, WALLS, FLOORING, CEILING, FIREPLACES,
KITCHEN, AND BATHROOMS;
PAGE 4-HOUSE BILL 23-1174 (I) THE AGE OF THE ORIGINAL STRUCTURE OR THE YEAR OF THE
ORIGINAL STRUCTURE
'S CONSTRUCTION; AND
(J) THE SIZE AND TYPE OF ANY ATTACHED GARAGE ; AND
(d) AN ESTIMATE FROM A CONTRACTOR OR AN ARCHITECT LICENSED
PURSUANT TO ARTICLE
120 OF TITLE 12, IF SUBMITTED BY THE
POLICYHOLDER
.
(9.5) (a) A
T APPLICATION AND RENEWAL OF A REPLACEMENT COST
HOMEOWNER
'S INSURANCE POLICY FOR A DWELLING THAT IS ISSUED OR
RENEWED ON AND AFTER
JANUARY 1, 2025, THE INSURER SHALL:
(I) P
ROVIDE THE APPLICANT OR POLICYHOLDER WITH AN ESTIMATE
OF THE COST NECESSARY TO RECONSTRUCT THE COVERED STRUCTURE
;
(II) D
ISCLOSE TO THE APPLICANT OR POLICYHOLDER , IN A FORM AND
MANNER PRESCRIBED BY THE COMMISSIONER BY RULE
:
(A) H
OW THE ESTIMATE WAS CALCULATED , TAKING INTO ACCOUNT
THE FACTORS LISTED IN SUBSECTION
(8) OF THIS SECTION; AND
(B) THE RECONSTRUCTION COSTS FOR HOMES AS DETAILED IN THE
ANNUAL REPORT REQUIRED IN SECTION
10-1-144 FOR THE SAME GEOGRAPHIC
AREA OF THE INSURED
'S HOME;
(III) P
ROVIDE COPIES OF ANY GENERATED ESTIMATES FROM ANY
SOFTWARE OR TOOLS OR SERVICES USED BY THE INSURER TO ESTABLISH THE
RECONSTRUCTION COSTS
;
(IV) P
ROVIDE THE APPLICANT OR POLICYHOLDER WITH THE WEB
ADDRESS OF
, OR A LINK TO, THE REPORT PREPARED PURSUANT TO SECTION
10-1-144; AND
(b) AN INSURER OTHERWISE SUBJECT TO THIS SUBSECTION (9.5) DOES
NOT HAVE TO COMPLY WITH THE REQUIREMENTS OF THIS SUBSECTION
(9.5)
IF:
(I) W
ITHIN THE TWO YEARS PRIOR TO THE OFFER OF RENEWAL OF THE
HOMEOWNER
'S INSURANCE POLICY, THE POLICYHOLDER HAS REQUESTED AND
PAGE 5-HOUSE BILL 23-1174 THE INSURER HAS PROVIDED COVERAGE LIMITS GREATER THAN THE LIMITS
PREVIOUSLY SELECTED BY THE POLICYHOLDER
; OR
(II) IN CONNECTION WITH ITS ANNUAL OFFER TO RENEW THE POLICY ,
THE INSURER HAS OFFERED THE POLICYHOLDER , ON AN EVERY-OTHER-YEAR
BASIS
, THE RIGHT TO RECALCULATE THE RECONSTRUCTION COST ESTIMATE
AND THE POLICY INCLUDES INFLATION PROTECTION COVERAGE
.
(15) The commissioner may adopt rules as necessary for wildfire
disasters that the governor declares pursuant to section 24-33.5-704 and for
the implementation of subsections (13) and (14) of this section. TO
IMPLEMENT THIS SECTION
, INCLUDING RULES REGARDING:
(a) T
HE INFORMATION THAT INSURERS MUST CONSIDER IN
ESTIMATING RECONSTRUCTION COSTS
;
(b) T
HE USE OF RECONSTRUCTING COST ESTIMATOR TOOLS AND
SERVICES
; AND
(c) THE REQUIREMENTS TO PROVIDE INFORMATION IN THE SUMMARY
DISCLOSURE FORM TO CONSUMERS THAT EXPLAINS REPLACEMENT COST
COVERAGE
, ACTUAL CASH VALUE COVERAGE , AND THE ABILITY OF
CONSUMERS TO PURCHASE AFFORDABLE COVERAGE
.
SECTION 4. Appropriation. (1) For the 2023-24 state fiscal year,
$109,955 is appropriated to the department of regulatory agencies for use
by the division of insurance. This appropriation is from the division of
insurance cash fund created in section 10-1-103 (3), C.R.S. To implement
this act, the division may use this appropriation as follows:
(a) $64,139 for personal services, which amount is based on an
assumption that the division will require an additional 0.8 FTE;
(b) $7,750 for operating expenses; and
(c) $38,066 for the purchase of legal services.
(2) For the 2023-24 state fiscal year, $38,066 is appropriated to the
department of law. This appropriation is from reappropriated funds received
from the department of regulatory agencies under subsection (1)(c) of this
PAGE 6-HOUSE BILL 23-1174 section and is based on the assumption that the department of law will
require an additional 0.2 FTE. To implement this act, the department of law
may use this appropriation to provide legal services for the department of
regulatory agencies.
SECTION 5. Act subject to petition - effective date. Section
10-4-110.8 (8), Colorado Revised Statutes, as amended in section 3 of this
act, takes effect January 1, 2025, and the remainder of this act takes effect
at 12:01 a.m. on the day following the expiration of the ninety-day period
after final adjournment of the general assembly; except that, if a referendum
petition is filed pursuant to section 1 (3) of article V of the state constitution
against this act or an item, section, or part of this act within such period,
then the act, item, section, or part will not take effect unless approved by the
PAGE 7-HOUSE BILL 23-1174 people at the general election to be held in November 2024 and, in such
case, will take effect on the date of the official declaration of the vote
thereon by the governor; except that section 10-4-110.8 (8), Colorado
Revised Statutes, as amended in section 3 of this act, takes effect January
1, 2025.
____________________________ ____________________________
Julie McCluskie Steve Fenberg
SPEAKER OF THE HOUSE PRESIDENT OF
OF REPRESENTATIVES THE SENATE
____________________________ ____________________________
Robin Jones Cindi L. Markwell
CHIEF CLERK OF THE HOUSE SECRETARY OF
OF REPRESENTATIVES THE SENATE
APPROVED________________________________________
(Date and Time)
_________________________________________
Jared S. Polis
GOVERNOR OF THE STATE OF COLORADO
PAGE 8-HOUSE BILL 23-1174